Children are undoubtedly the top priority for parents. Every parent, irrespective of his or her financial status, would want only the best for the children and good health is no exception. Any medical problem with the child is a double whammy because the parents have to suffer emotional as well as financial trauma. Unforeseen and alarmingly high health expenses can even cause a serious dent in the parents’ pockets.
It is commonly observed that in case of family medical covers, parents often ignore health cover for their children or restrict the same to a relatively smaller sum. Typically, parents provide for a cover up to Rs 50,000 for their children and the coverage increases gradually with the age of the children. However, this may not be the best thing to do.
At a younger age, the child is more susceptible to illnesses and preventive services like immunisation and medical care for recurring illnesses such as asthma, ear or throat infections.
Need for adequate medical cover: In developed countries, it is observed that children who have health insurance coverage generally, have better health throughout their childhood and into their teens. They are less likely to get sick and more likely to get preventive care to keep them well. At the same time, they get the required treatment they need when they are sick or injured, without the parents having to bother much about the financials.
An important reason children should have adequate healthcare is that the injuries or diseases a child suffers early in life can affect his growth and development. No doubt, parents can and would pay for their child’s health expenses, but at times, costs can be prohibitive.
How is it different from any other medical policy? Life insurance companies offer a variety of plans specifically designed to protect the needs of children especially in the absence of parents on the traditional and non-traditional platform. There are other plans which also offer investment at various stages of a child’s growth like higher education, marriage and so on.
Unlike life insurance, there are no dedicated medical plans available for children but can only be covered under the same plan as their parents. The only means by which health coverage can be provided is by way of a family floater policy or individual cover for the child combined with one of the parents. Most family policies have a cap on the number of kids that can be included in the cover.
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Some of the available medical policies cover children only from the age of five. However, a younger child may be allowed to be covered from the 91st day, if both the parents are covered under the same policy (varies across companies).
Hence, children’s medical policies are similar to adults’. The cover would provide reimbursements for nursing and related expenses during hospitalisation and also cover the pre and post hospitalisation costs as prescribed under the policy guidelines.
Strategy for child cover: It is advisable to take individual covers in the name of children (minimum of Rs 3 lakh per child) along with the parents in the same policy. To illustrate, the following example for a family of four will be helpful in deriving a good strategy for optimum child medical coverage.
It is assumed that the eldest member in the family is below 35 year of age. In both situations, it is extremely important that both the parents have medical coverage of Rs 5 lakh each. Since the children cannot be covered under an independent policy, a family floater plan including the father and the 2 kids is considered for a floater cover of Rs 3 lakh.
In the second proposition, a family floater policy is considered where both the parents are covered up toRs 5 lakh each and both the kids are covered up to Rs 3 lakh each.
It may be observed from the table, that a family policy not only helps in securing separate covers but is also friendly to the pocket. If finances are not a constraint, then it is advisable to have separate covers for the children and parents. A floater policy can always be added as an additional safeguard. At this juncture, it is advisable to keep in mind that medical premiums paid for self, spouse and dependent children are deductible from the taxable income to an extent of Rs 15,000 under section 80D of the Income Tax Act.
| HEALTH EXPENSE SHEET | ||||
| Type of cover | Sum assured | Situation 1 Premium outgo (Rs) | Situation 2 Premium outgo (Rs) | |
| Parents | Individual cover | Rs 5 lakh | 11,813 | - |
| Eldest parent, 2 kids | Family floater | Rs 3 lakh | 5,739 | - |
| Parents, 2 kids | One cover for parents and one for kids | Parents = Rs 5 lakh; Kids = Rs 3 lakh | - | |
| Total | 17,552 | 16,886 | ||
| (For the purpose of these illustrations, the quotes used are those for the respective plans of Apollo Munich Health Insurance, the same should not be construed as any recommendation). | ||||
For salaried individuals, covered under group medical policies provided by their companies, also helps in enhancing the cover for kids. But these policies should strictly be supplementary to independent medical coverage.
Learnings from trends abroad: Child only plans available in the United States are individual health insurance policies made available to children under age 18 with no parent or guardian listed on the same policy. The 2010 Patient Protection and Affordable Care Act prevents insurers from declining health insurance applications for children due to pre-existing medical conditions.
However, recently a lot of health companies have discontinued offering such plans on concerns that parents could delay purchasing cover for children until they got sick. Some countries even offer ‘baby health insurance’ which provides coverage right from birth till approximate 30 days post delivery.
To sum up, it is important that children are actively and adequately included in the medical policies of parents, who are concerned about coverage for their child and want to ensure coverage even during change in jobs or in times of uncertainty.
The writer is a certified financial planner